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SEIN Advanced Rate Design Project


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Describes the results of a National Renewable Energy Laboratory sponsored innovation project for designing tariffs, rates, and customer programs to incentivize the deployment of Distributed Energy Resources. In particular we examine customer-sited, centrally controlled energy storage (aka batteries) aggregated into a VPP. We propose a VPP operating strategy and quantify a number of value stream that could be realized by executing that strategy.

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SEIN Advanced Rate Design Project

  1. 1. Solar Energy Innovation Symposium June 6, 2019 Advanced Rate Design Project NREL Solar Energy Innovation Network
  2. 2. Project Team • Center for Climate Protection Lead • TerraVerde Energy LLC Technical Development • Lancaster Choice Energy Consultation, Virtual Pilot • Peninsula Clean Energy Consultation, Virtual Pilot • Grid Policy LLC Policy/Technical Advisor • California Solar & Storage Association Policy Advisor
  3. 3. Project Goal • Create a software tool for helping Load Serving Entities design tariffs that incentivize the deployment of Distributed Energy Resources.
  4. 4. What’s a DER? Distributed Energy Resource: Any customer-side resource for improving the quality and availability of electric power, system-wide. • Solar Panels • Battery Storage • Smart Electric Vehicle Chargers • Smart Thermostats • Smart Water Heaters • Demand Response Programs
  5. 5. Strategy: Consider the net effect of a deployment program: 1. Assess net economic impact of DER program. 2. Assess net GHG impact of DER program. 3. Assess value available to share with customers to incentivize DER deployment.
  6. 6. Scope, as Ambitiously Envisioned • Software tool works for any Load Serving Entity. • Software tool sets rates for any DER type.
  7. 7. Actual Scope Any Load Serving Entity >> California CCAs • The value of a DER program depends on regulatory environment. • California CCAs are empowered to set rates without regulatory oversight.
  8. 8. What’s a CCA? Community Choice Aggregation agency: A public agency empowered to buy electricity in wholesale markets to sell in competition with Investor-Owned Utilities. • Historically aligned with GHG reduction and other community goals. • Empowered to set rates without regulatory oversight. • Own very few energy system assets. • Exploding reach within California. • Young, small, & relatively nimble.
  9. 9. Actual Scope Any DER type >> Solar + Dispatchable Storage Between DER types, very significant variation in: • Required customer investment. • Impact on LSE revenues. • Ability to impact wholesale procurement costs.
  10. 10. CCA Engagement Through engagement with the CCA Community we narrowed our focus to analyzing solar + dispatchable storage: • Focus group calls • DER values matrix • 1:1 meetings with Virtual Pilot partners
  11. 11. What’s a VPP? Virtual Power Plant: A network of customer sited batteries that can be centrally controlled to provide grid benefits. • Dispatch VPP power as an alternative to buying in wholesale power markets. • Dispatch clean energy as alternative to buying dirty energy in power markets. • Sell power into wholesale markets when prices are high. • Store excess generation when prices are low. • Reduce resource adequacy and other demand-related wholesale costs. • Participate in utility demand reduction programs. • Sell into ancillary service markets.
  12. 12. VPP Suppliers Market Access Operation Strategy DER Aggregation Olivine x x x Leap x AMS x Stem x Engie x x Sunrun x
  13. 13. Tool Creation Roadmap 1. Identify CCA goals for deploying solar + storage systems. 2. Research capabilities and limitations of VPP technology. 3. Analyze average economic benefit per kW of VPP storage. 4. Analyze GHG benefit per kW of VPP storage. 5. Research costs of installing customer-sited storage with solar. 6. Research best practices for incentivizing program participation. 7. Propose tariff structure and terms. 8. Run virtual pilot projects to demonstrate feasibility.
  14. 14. Analyzing Economic Benefit 1. Ingest CCA’s procurement history data. 2. Model CCA’s historic procurement costs. 3. Model the change in load from operating a VPP. 4. Analyze values streams achieved by VPP operating strategy.
  15. 15. Procurement History Data 8760 hours of hour-by-hour procurement cost data (24 x 365 = 8760) • Bilateral agreements: hourly volume and price • Scheduled Load: hourly volume • Day-head market: hourly price • Actual Load: hourly volume • Imbalance market: hourly price • Resource adequacy: hourly cost • Other fees and credits: hourly cost/credit
  16. 16. Procurement Cost Model 1. Scheduled Load a. 24 hours of anticipated load, reported one day ahead. b. Includes bilateral hedges. c. Scheduled Load – Hedged Load = day-ahead market purchase. 2. Imbalance a. Imbalance = Actual Load – Scheduled Load. b. ISO procures power to meet system demand in real time. c. Imbalance load is deduced retrospectively from meter data.
  17. 17. VPP Strategy: Load Flattening Flatten your load at:
  18. 18. VPP Strategy: Load Flattening Flatten your load at:
  19. 19. Value Stream: Day-Ahead Peak Avoidance
  20. 20. Value Stream: Sell into Real-Time Market
  21. 21. Value Stream: Resource Adequacy
  22. 22. Stacked Value Streams
  23. 23. Additional Value Streams • Offsets to customer utility distribution demand charges. • Improved GHG profile. • Battery resiliency benefits.
  24. 24. Next Steps: Propose Rate Terms • Analyze as a program. • Tri-lateral Agreements (LSE + Customer + Operator) • Operate to maximize system benefit. • Align compensation with system benefit.
  25. 25. Next Steps: Virtual Pilot Projects Analyze customer’s annual retail cost and LSE’s annual wholesale cost to supply customer under three scenarios: 1. With no Solar + Storage. 2. With Solar + Storage under existing tariff. 3. With Solar + Storage under proposed tariff.
  26. 26. Tool Creation Technical Support/Guidance ‣ NREL and RMI Advisors: ‣ Helped us determine the need to narrow the scope of our design model to a single type of DER deployment ‣ Helped us determine the need to reduce the target audience from all LSEs to CCA agencies in California. ‣ Shared procurement expertise which supported us in the process of identifying the VPP operating strategies that are most likely to yield economic and GHG benefits. ‣ Technical Consultants ‣ Chris Sentieri, Blue Strike Environmental ‣ Jon Wellinghoff, former Chairman of the Federal Energy Regulatory Commission
  27. 27. QUESTIONS? THANK YOU Storn White Director of Software Development TerraVerde Energy, LLC and don’t forget to flatten your load at: